1. INCREASE IN TRADE RECEIVABLES
Note to the financial statements of the company on Trade Receivables that there is an increase in trade receivables while comparing the outstanding balance as at the end of the previous year and the current year.
However, in the Cash Flow Statement of the company, the reported amount of increase in trade receivables did not match with the figures reported under the note of Trade Receivable.
It was viewed that the difference in amounts reported raises doubt on the correctness of the Cash Flow Statement of the company.
2. External Commercial Borrowings
Balances of External Commercial Borrowings shown under both non-current borrowings and Other current financial liabilities reduced from previous year to current year.
However, in the Cash Flow Statement under the head Cash Flow from Financing Activities, the amount of repayments of External Commercial Borrowings reported was different from what should have been done as compared to the reduction disclosed in the notes to the financial statements.
If the difference in the amounts reported in the cash flow statement and what should have been reported as per the notes to the financial statements were due to any repayment in a mode other than cash then the same should have been disclosed separately as required in Ind AS 7 but no such disclosure was made.
3. INCOME TAX PAID /PROVISIONS
It was noted that the income tax expense as disclosed under Statement of Profit and Loss was same as disclosed in cash flow statement as income tax paid.
Considering the balances of provision for taxation and advance tax appearing in the balance sheet, it was viewed that both the amounts could not be the same.
In the Statement of Cash Flow, the actual amount of income tax paid by the company should have been disclosed.
4. FOREIGN EXCHANGE FLUCTUATION
Amount of Net gain on foreign currency transactions reported (deducted) was different from the amount of Foreign Exchange Fluctuation (Net) adjusted in the Cash Flow Statement under the heading of Cash flows from Operating Activities.
It was viewed that the figures of items should be the same across the financial statements, else it would be construed as a non-compliance under Ind AS 1.
5. CAPITAL EXPENDITURE
The capital expenditure was on account of cash paid to acquire property, plant and equipment.
It was viewed that such cash outflow should have been reported using the proper description of the line item viz. Acquisition of property, plant and equipment rather than as capital expenditure in line with the above-mentioned requirements of Ind AS 7.
6. Following discrepancies relating to Cash Flow
- There was no depreciation debited to Statement of Profit and Loss, however, the same was erroneously adjusted in the cash flow statement.
- The fair value adjustment on interest free ICD (Inter-corporate Deposit) received from the holding company were shown under cash flow from financing activities as repayment.
- The proceeds from long term borrowings – Financial institution which was shown under cash flow from financing activities was contrary to its presentation under note on the financial liabilities where it was classified as short-term borrowing. Thus, contrary information was provided in the financial statements.
CAclubindia
